An interesting article on the topic is Empire of the In-Between, by Adam Davidson, in the November 4th New York Times Sunday Magazine (Photos by Pieter Hugo). It talks about the industrial corridor between New York and Washington, and what has happened to it over time. As an example, in 1940 half of the New Jersey work force worked in factories, and today only 7 percent do. As a particular example of change, it singles out Wilmington Delaware, a former industrial city, which is apparently now a major service center of lawyers and accountants helping companies take advantage of Delaware’s regulations and rules (which are extremely hospitable to business). According to the article, the state’s web site claims that 63 percent of Fortune 500 companies, and half of all publicly traded companies are incorporated in Delaware. Of these only two have headquarters there (Dupont and Sallie Mae)
I was discussing this article with my friend and colleague Professor Dave Beach, who is the director of the Product Realization Laboratory at Stanford University, an outstanding program which stresses integrated design and manufacture and is somewhat unique in that students actually design and manufacture products in final form. He is optimistic about manufacturing in the U.S., but sees it moving to more diversified, smaller, and more numerous firms producing more sophisticated products—and incidentally, providing more satisfying work for employees. The two of us agree that traditional labor-based manufacturing will continue to occur in countries with extremely low labor rates, but as their economies strengthen, they too will become increasingly automated, and produce more indigenous and high value-added products. The type of factory shown in the photo below is definitely a thing of the past in the U.S. In Professor Beach’s opinion, that is okay, since traditional assembly line work was not exactly uplifting to the human spirit.
I am not as sanguine as the presidential candidates that a
stronger economy will solve the perceived unemployment problem easily or
rapidly. The U.S. has always loved
such things as growth, productivity, and jobs in which hard manual work resulted in
advancement in life. As the New
York Times article points out,
such things were abundant in the 1950’s and 1960’s,. But global
competition, computers, and increasingly powerful digital control of machinery
will continue to change manufacturing.
We are going through a change that is perhaps less major, but somewhat similar to the one that
occurred when agricultural employment dropped from a large percentage of the
population to 2 or 3 percent. In
that case, people no longer needed in agriculture went to industry. Where do they go now?
A stronger economy will help the manufacturing sector. If U.S. products increase in quality, thereby resulting in a more positive balance of trade, more manufacturing jobs will result. Increased training and education, either in schools or companies, is obviously needed to support the changing manufacturing scene. More university programs such as Professor Beach’s Product Realization Laboratory would help. However, the trend toward automation will continue to shrink the number of people needed to manufacture goods, and I don’t see anything in the philosophy of capitalism or the nature of companies that would cause companies to continue to employ people they do not need.
To what extent should government be involved in this transition in which—although many people receive more satisfaction from being involved in the manufacturing sector than in other occupations and manufacturing is certainly essential to a balanced economy— fewer people are needed to produce products,? Next post.
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